FAIR TRADE

II.51.1

FAIR TRADE. During the remarkable period of industrial and commercial depression and disturbance that prevailed in Europe and the United States from 1873 to 1878-9, the idea became somewhat popular in England that the special economic troubles which Great Britain then experienced, i.e., a diminution of exports and a consequent depression of her manufacturing industries, were due mainly to the unfair conditions which characterized British international exchanges; or to the lack of anything like reciprocal fairness and liberality, on the part of foreign nations, in respect to matters of trade and commerce in dealing with Great Britain. Thus, it was affirmed, and without the possibility of contradiction, that while Great Britain permitted the free importation into her own ports of nearly all the products of all foreign nations, these same nations at the same time not only imposed heavy and often prohibitory duties on the importation into their territories of the products of British industry, but also, in some instances—as in the case of the beet-root sugar of France—subsidized competition, and even made the underselling of British products in their home market possible by the granting of bounties on exports. It was, therefore, claimed that while the policy of commercial liberality in free trade adopted by Great Britain had been magnanimous, it had proved disastrous, because it was one-sided, and not reciprocated, and that the commercially wise and proper course for Great Britain to take, under such circumstances was to institute and enforce "fair trade," by applying to each foreign country a tariff of duties which would correspond as nearly as possible to the tariff which such country enforced against its imports of British products. The programme of the so-called "fair traders," so far as it was definitely formulated, appears to have embodied the following as its principal features 1. Raw materials of manufacture to be admitted free. 2. Food to be taxed when coming from foreign countries: to be admitted free when coming from British colonies: this taxation to be maintained for a considerable term, in order to give the colonies time to develop their products. 3. Tea. coffee, fruit, tobacco, wines and spirits to be taxed 10 per cent. higher when coming from foreign countries than from British colonies. 4 Duties to be levied upon the importation into Great Britain of the manufactures of such foreign countries as impose prohibitory or protective duties on British manufactures; such duties to be removed or abated in the case of any nation which might agree to remove or abate its restrictions on British imports.

II.51.2

—Nothing, however, resulted from the presentation of these ideas and propositions, except discussion, and this in fact was all that was needed: for discussion soon satisfied the British people generally, that while commercial reciprocity on the part of foreign nations would undoubtedly greatly augment their international exchanges, and while ample warrant and occasion existed for the enactment of such retaliatory tariffs as the "fair traders" proposed, yet such enactments would be far from expedient, and not likely to result in any substantial benefit to British trade, industry or commerce. It was shown, in the first place, that a retaliatory commercial policy on the part of Great Britain against foreign nations, would be more likely to induce further retaliation on the part of the latter, rather than greater commercial liberality; as it was the genial warmth of the sun rather than the piercing blasts of the wind that induced the traveler to take off his coat. Second. That it would not be easy to draw the line between raw material and manufactures, and that any, even indirect, enhancement of the raw materials of British industries, would work to their detriment. Third. That to enhance the cost of food by imposing discriminating duties on food imports, would tend to reduce the size of the loaf to the British workman, and, by increasing the expenses of his living, practically reduce his wages. Fourth. That the so-called luxuries, tea, coffee, tobacco, wines and spirits, were already taxed for purposes of revenue in Great Britain to as great a degree as was expedient Fifth. That government can not create trade, and can not divert it without diminishing it. "When people talk of its being the duty of the government to find markets for their people, what they mean is, that the government shall deprive their people of the markets which they find for themselves." One argument put forth by the "fair traders" in support of their policy, which at first sight appeared rather more plausible than most of the others advanced by them, was that British manufacturers should be in some way compensated for "restricted hours of labor and for exceptional taxation" imposed upon them by home legislation; and that if the legislature choose to place disabilities on particular industries, the country at large should bear the cost, and not the particular industries. To this it was replied, that any such disabilities as cited were not imposed intentionally by the legislature: that the assumption has always been that cheap labor is not necessarily efficient labor; and that any system which tends to the degradation of the working chasses, and prevents them from attaining a certain moral, intellectual and physical standard, directly impairs their physical energy. Hence legislation repressive of such systems was, on the whole, beneficial. But if it could be shown that any statute restrictions on labor or any special disabilities really diminish the efficiency of the industries they affect, it should be the object of reformers to address themselves to the legitimate task of obtaining relief from unwise or unjust laws, and not to extend their operation.

II.51.3

—But the most efficient of all arguments, preferred against the views of the "fair traders," was the record of the progress of Great Britain since it began to relax and finally abandon the protective system. Thus in 1829, soon after the removals of restrictions on commerce instituted by Mr. Hankinson and Poulett Thomson, the declared value of British and Irish exports was $179,000,000; in 1839, it was $266,000,000; in 1849, just after the repeal of the corn laws, it was $317,000,000; in 1859, the year before the French commercial treaty, it was $652,000.000, in 1869, after nine years of the treaty and before the Franco-German war, it was $949,000,000; and in 1880, $1,115,000,000. It was also shown that during the periods when the liberal commercial policy of Great Britain was claimed to have specially acted to her great disadvantage, or from 1870 to 1880, the per capita consumption of staple articles of food—the best barometer of the condition of the people—had greatly increased: tea, from 3.18 lb. to 4.59; butter, from 4.15 to 7.52; bacon, from 1.98 to 15.96; sugar, from 41.4 to 59; and tobacco, from 1.30 to 1.49 Pauperism and convictions for crime had also during the same period materially decreased, and the deposits in the savings banks materially increased. The theory and plans of the fair traders accordingly made little permanent impression on the British public; the government gave no attention to them; and with the revival of domestic industries and foreign trade, the whole subject has ceased to attract interest in Great Britain, or be regarded as of any practical importance.

II.51.4

—Among the more important publications which have appeared in Great Britain on this subject, reference may be made to the following. In favor of fair trade: A Plea for Limited Protection or Reciprocity, by Lord Bateman, pamphlet; an article by Richard Wallace, in the Contemporary Review, March, 1879; an article by Farrer Ecroyd, in the Nineteenth Century, for October, 1880. In opposition to or in refutation of the theory of fair trade reciprocity A Letter by Sir Louis Mallet to Mr. Thom. Bayley Potter, of the Cobden Club, 1879; Free Trade versus Fair Trade, by T H. Farier, 1882; and The Recent Depression of Trade, its causes, and the remedies that hate been suggested for it, by Walter E Smith, Oxford, Cobden prize essay, 1879.

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